Like my colleague The Moose, I was stunned by press accounts of Federal Reserve Board Chairman Alan Greenspan’s testimony to the administration’s tax reform study commission yesterday. Back in 2001, you may recall, Greenspan endorsed Bush’s tax cuts on the bizarre theory that otherwise the national debt might disappear and the federal government would have to start buying equity in private businesses to dispose of excess cash. More recently he has returned to his pre-Clinton administration doomsaying about federal budget deficits. So what does he propose now? Draining more revenues from Washington by creating big, fat tax-free savings vehicles to enable high earners to shelter investment income from taxation.To be sure, what Greenspan actually wants is a national consumption tax, and endorses tax-free savings vehicles as a back-door means to that goal. This approach, of course, is a big part of the Grover Norquist “starve the beast” strategy of deliberately engineering large budget deficits in order to force big cutbacks in federal spending, or a shift in the tax base towards wage income or consumption, or all of the above.And the convergence of the Norquist and Greenspan approaches represents a stunning demonstration of how politics has completely debased a large part of the U.S. libertarian tradition.In Grover’s case, the big deal with the devil was his acceptance of the idea that repealing any sleazy corporate tax break represented a verbotin “tax increase.” Thus, instead of championing a level playing field for business competition and for tax policy, Norquist is now the tribune for corporate favoritism and reverse-Robin-Hood fiscal strategies, which help finance and politically drive an agenda that is “libertarian” only to the extent that it screws up government in a way that might eventually cause its general demise.Greenspan’s own Faustian Bargain stems from his famous “pragmatism”–barred by the limited role of the Fed, and by political realities, from actively promoting the free-market paradise he has long espoused, he consistently reaches out to endorse “politically feasible” policies that indirectly achieve his ends–typically, the free candy of tax cuts and tax breaks.Thus, both men embrace a stealth libertarianism that isn’t libertarian at all in its means. We all know Grover’s many ideological and rhetorical vices, but for all his legendary power and influence, he’s essentially just another Washington jive-ass thriving at the intersection of money and politics. But it’s beginning to become more apparent every day that the oracular Chairman has an equally twisted agenda.The Moose’s post today linked to an AEI article by Bill Bradford aboutGreenspan’s much-reported but oft-forgotten association with the Objectivist cult of novelist and proto-libertarian Ayn Rand. I thought I knew the story pretty well, but two things really startled me in Bradford’s piece: (1) Greenspan went straight from Rand’s inner circle (ironically but accurately known as “The Collective”) into the 1968 presidential campaign of Richard Nixon. In fact, Greenspan was already knee-deep in conventional Republican politics when he signed onto Rand’s bizarre excommunication of her protege and former lover Nathaniel Brandon. (2) When asked during various Senate confirmation hearings over the years if he still adhered to Randian dogmas like abolition of all regulations and a return to the gold standard, Greenspan gave no sign of a change of heart or mind.Given Greenspan’s current status as a close ally of George W. Bush, you kinda wish someone had recently asked him if he still regards belief in God as a deadly “mysticism of the mind” (corresponding to socialism, the “mysticism of the muscle”), a key tenet of the Objectivist canon. But whatever his political prudence and well-rehearsed routine as a mere economic technocrat, it is becoming clear that his formative extremism has not gone away–just the candor with which his mentor always expressed her oppressively dogmatic views about ends and about means.
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Editor’s Corner
By Ed Kilgore
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February 6: Democrats Have Wised Up and Stopped Trying to Cooperate With Trump
This has been quite the chaotic week or so, and one of the byproducts of the nihilistic conduct being displayed by Donald Trump and his allies has been a decided end of Democratic cooperation, and I welcomed that development at New York:
Following the time-honored ritual of giving a new president a “honeymoon,” a good number of prominent Democrats made friendly noises about their nemesis after Donald Trump’s November election victory. Some, like Pennsylvania senator John Fetterman, seemed inclined to cross the partisan barricades whenever possible, praising Trump’s dubious Cabinet nominations, calling on Joe Biden to pardon Trump to get rid of his hush-money conviction, and even joining Truth Social. Others, notably Bernie Sanders, talked of selective cooperation on issues where MAGA Republicans at least feigned anti-corporate “populism.” Still others, including some Democratic governors, hoped to cut deals on issues like immigration to mitigate the damage of Trump’s agenda. And one congressional Democrat, the normally very progressive Ro Khanna, promoted cooperation with Elon Musk’s DOGE initiative, at least with respect to Defense spending.
This made some sense at the time. After all, Democrats, having lost control of both Congress and the White House, didn’t have much power of their own, and there was always the chance that having achieved his improbable comeback, Trump would calm down and try to become a normal chief executive in his final term in the job.
Now it is extremely clear that is not the case. The past chaotic week or so has convinced most Democrats that Trump has zero interest in compromise, bipartisanship, or even adherence to the law and to the Constitution. Musk and his Geek Kiddie Corps are ravaging agency after agency without the slightest legal authorization; OMB is preparing its own unilateral assault on federal benefits that don’t fit the Project 2025 vision of a radically smaller social safety net; and congressional Republicans are kneeling in abject surrender to whatever the White House wants. Democrats are resigning themselves to the mission of becoming an opposition party, full stop, making as much noise and arousing as much public outrage as they can. They shouldn’t be credited all that much for courage, since the new regime has given them little choice but to dig in and fight like hell.
OMB’s January 27 memo freezing a vast swath of federal programs and benefits, inept and confusing as it was, kicked off the current reign of terror. It reflected (and was likely dictated by) the belief of Trump OMB director nominee Russell Vought that the president can usurp congressional spending powers whenever he deems it necessary or prudent. Yet Congressional Republicans went along without a whimper. House Appropriations Committee chairman Tom Cole, who would have gone nuts had a Democratic president threatened his role so audaciously, said he had “no problem” with the freeze. The federal courts stepped in because OMB’s order was incoherently expressed, but there’s no question the administration will come back with something similar. As a sign of belated alarm over OMB’s direction, Senate Budget Committee Democrats boycotted Vought’s confirmation vote in reaction to this challenge to the constitutional separation of powers. After Republicans gaveled him on through without a whisper of dissent, Senate Democrats held an all-night “talk-a-thon” to recapitulate past and present concerns about Vought, a self-described Christian Nationalist and one of the principal authors of the Heritage Foundation’s Project 2025 blueprint for a radically diminished federal government. He will be confirmed by the full Senate anyway.
Musk’s guerrilla warfare on the federal workforce and the programs they administer made the OMB power grab unfolding at about the same time look like a walk in the park. Even as his landing teams of 20-something coders took control of multiple agency IT systems and fired anyone who got in their way, Musk himself was on X making wild charges about the programs he was short-circuiting and all but cackling like a cartoon villain over his unlimited power. When Ro Khanna upbraided him for his lawlessness, he responded as you might expect, tweeting at Khanna: “Don’t be a dick.”
Khanna’s centrist Democratic colleague from Florida, Jared Moskovitz, had actually signed up for service on the DOGE oversight panel Mike Johnson created, despite its clear purpose as an ongoing pep rally for Musk. Now he’s out, as Punchbowl News reports:
“I need to see one of my Republican colleagues in the caucus explain the point of the caucus, because it seems that Elon doesn’t need them, because it seems what Elon is doing is destroying the separation of powers. And I don’t think the DOGE caucus at this moment really has a purpose … Whether I stay in the caucus, I think is questionable. I don’t need to stay in a caucus that’s irrelevant.”
Meanwhile, as all this madness was unfolding from the executive branch and its outlaw agents, congressional Republicans have been laboring through the process of putting together budget legislation to implement whatever portion of Trump’s agenda that wasn’t rammed through by fiat. Democrats are not being consulted at all in these preparations to produce a massive bill (or bills) that is expected to pass on a party-line vote and that cannot be filibustered in the Senate. Because of the immense leverage of the House Freedom Caucus over this legislation, the plans keep shifting in the direction of deeper and deeper domestic spending cuts at levels never discussed before. Per Punchbowl News:
“Speaker Mike Johnson and the House Republican committee chairs initially proposed between $500 billion to $700 billion in spending cuts as part of a massive reconciliation package. Yet conservative GOP hardliners rejected that, saying they wanted more. They’re seeking as much as $2 trillion to $5 trillion in cuts.”
Democrats can’t really do anything other than expose the extent and the effect of such cuts in the forelorn hope that a few House Republicans in particularly vulnerable districts develop their own counter-leverage over the process. But whatever emerges from the GOP discussion will have to be approved by OMB, where Russell Vought will soon be formally in charge. There’s just no path ahead for Democrats other than total war.
They do have their own leverage over two pieces of legislation Trump needs: an appropriations bill to keep government running after the December stopgap spending bill (which Musk nearly torpedoed in an early demonstration of his power) runs out, and a measure increasing the public debt limit. These bills can be filibustered, so Senate Democrats can kill them. There are increasing signs that congressional Democrats may refuse to go along with either one unless Trump puts a leash on Vought and Musk and perhaps even consults the Democratic Party on the budget. If there’s a government shutdown, it couldn’t be too much worse than a government being gutted by DOGE and OMB.
Republicans hope that Trump’s relatively strong popularity (for him, anyway) will keep Democrats from defying him. But they may not be accounting for the 47th president’s erratic character. On any given day, he may do something completely bonkers and deeply unpopular, like, say, suggesting the United States take over Gaza, expel its population, and build a resort development.